2015-06-25

Equities More Volatile Than Homes, But Less Leveraged

Some nuggets from an article on investing in iFeng:

Since July 1991 there have been 22 weeks with 10% drops in Chinese equities. Of these, 14 took place before 1995 and only 5 since 1996, with 3 occurring in 2008. The main reason for the drop in volatility was the introduction of the 10% daily limit on stock price fluctuation. Homes are less volatile due to much less frequent transactions.

As for the impact of taxation on the lever and a market, stock market investors are not yet fully clear, take the Chinese real estate market, their down payment ratio of 20 percent are not unusual (equivalent to five times the leverage), and most people mainly rely on loans to buy a house, even a "zero down payment" (Leveraged 100%). In addition, prices rose rapidly, the government on the real estate market trading links has repeatedly increase taxes. In this case, the prices are not because of the leverage and taxation issues caused by excessive market fears, but there was a wave of higher housing prices rose, leading the government had introduced the "restriction", "limit" and other measures .

In 2012, the average professional investor held shares for 143 days, versus 45 for the average investor...
Thus caught in a vicious circle: the shorter the holding period the greater the risk, the greater the risk, the shorter holding time.

In view of this, retail investors in the stock market who study the real economy are making a big fuss over a small thing, besides, those who are very professional and institutional investors, are not leaving the Chinese stock market due to slowing economic growth.

iFeng: 为啥中国房子比股市抗跌?原因被一语道破

No comments:

Post a Comment